If We Didn't Have the NYT to Tell Us That Spain's Structural Reforms Were Working So Well, We Probably Would Never Know It

Sunday, 27 July 2014 15:30

That's because the data don't give any evidence of a great success. Nonetheless after noting the difficulties that France and Italy are facing in the implementation of labor market reforms, the NYT told readers:

"By contrast, the idea of making Luis De Guindos the new head of the Eurogroup, which brings together the zone’s finance ministers, is a good one. Spain’s finance minister is in a perfect position to explain to his colleagues the value of structural overhauls, because they have worked so well in his country."

The OECD's data on employment rates doesn't show much evidence of a structural overhaul working well in Spain. Its employment rate (EPOP) for workers between the ages 15 to 64 has risen by 0.5 percentage points over the last year to 55.3 percent. Over the same period, France's employment rate also rose by 0.5 percentage points to 64.4 percent. It's not obvious France has much to learn from Spain based on these numbers.

There's a little better story for Spain if we look at prime age workers between the ages of 25-54. The EPOP for this group rose by 0.7 percentage points over the last year to 66.5 percent. By comparison, in France the EPOP for prime age workers rose by just 0.3 percentage points to 80.8 percent. If these trends continue, Spain's EPOP for prime age workers will exceed France's by 2055. It will get back to its pre-recession level by 2043.

Given the data, it would be understandable if other European leaders were hesitant about taking advice from the Spanish government.

This article promotes more contractionary policies to solve the results of contractionary policies, and nothing to increase sustainable growth. It's full of greatest hits jargon like structural reform, labor market liberalization, fast tracking, the need to rein in public spending, avoid tax increases, do more quantitative easing, imminent debt spiral...

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BLS EPOPs are for all people over age 16written by Dean,
July 27, 2014 6:34

The EPOP for people over age 65 is very low.

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Austerity Now!written by Larry Signor,
July 27, 2014 8:35

Obviously, France needs to adopt a seriously austerian policy immediately. An EPOP of 80.8%...who has ever heard of such a thing? Soon they will want a 35 hour work week. Oh...my bad.